The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed’s Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
Seeking the Slack
Where is the excess slack in the labor force?
Last week, the April Employment report from U.S. Bureau of Labor Statistics reported that the unemployment rate (U-3) edged down slightly to 5.4 percent (after rounding) over the prior month, which is well below the high of 10.0 percent in late 2009. Despite this encouraging improvement, wage growth remains low, and many agree that slack remains in the labor market. The consensus of the Federal Open Market Committee (FOMC) has been that more progress can be made, as noted in the Chair’s press conference in March. One factor we have been paying particular attention to here at the Atlanta Fed is excess slack in the labor market captured in the U-6 unemployment rate, which includes the unemployed, those who are working part-time but would prefer full-time employment (part-time for economic reasons, or PTER), and those who have stopped looking for work during the last 12 months but were willing to work (marginally attached).
Below is a chart showing the U-3 unemployment rate (depicted in blue) and the U-6 rate (in red). The difference between the two is often referred to as “the gap,” and this area shaded below in light red represents the excess slack in the labor force. Between 2000 and 2008 the gap averaged 3.7 percentage points but then rose to a high of 7.3 percentage points during the recession. Since late 2011, the gap has declined and was 5.4 percentage points in April, but it remains well above the usual amount of excess slack in the labor force experienced earlier in the decade. Earlier analysis by my Atlanta Fed colleague Pat Higgins identified a significant connection between U-6 and the subdued wage growth the economy has experienced in recent years.
Just as the U-3 unemployment rate varies widely across states, so too does U-6.
Below is a map that shows where the gap between U-6 and U-3 was greatest during the first quarter of 2015. States shaded in red have a gap higher than the United States overall, and states with a lower-than-average gap are shaded in green.
Twenty-one states are shaded red, and they are mostly concentrated along the West Coast, the Southeast, and the Great Lakes region. The gaps were largest in Arizona, Nevada, and California, respectively—the so-called Sand States—where the housing boom and bust were most dramatic.
The gap was below the U.S. average in 29 states and Washington, DC. Notably, the central part of the country is shaded green. The smallest gap is in North Dakota, South Dakota, and Wyoming, states that have benefited in recent years from a boom in mining activity or energy extraction.
Of course, a large or small gap relative to the U.S. average does not tell us if the gap is unusual. For example, the red states in the chart also tend to be states whose U-3 rate and U-6 rate are also above the U.S. averages.
A way to get a sense of whether the gaps are abnormally high is to compare the gap on a state-by-state basis with that state's average gap prior to the Great Recession. (Here, I use data from 2003 to 2007 to create a prerecession baseline for each state.) As the map below shows, most states remain above their prerecession average gap and are shaded red, although a few exceptions are shaded green and sit slightly below the prerecession average. Nevada and Arizona's gaps remain stubbornly high and actually worsened in the latest quarter.
Clearly, many states have a ways to go to attain the average labor market conditions they experienced prior to the Great Recession.
By Whitney Mancuso, a senior economic analyst in the Atlanta Fed's research department
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Southeastern Labor Market Continues Strengthening
December 2014 state-level labor market data from the U.S. Bureau of Labor Statistics reflected a strengthening labor market among Sixth District states, with a declining aggregate unemployment rate and solid job gains.
Unemployment rates decline, albeit modestly
The aggregate district unemployment rate in December was 6.2 percent, a 0.2 percentage point decline from the previous month and 0.5 percentage point lower than a year ago. Although higher than the 5.6 percent national figure, the aggregate rate continues to trend down. In fact, Florida matched the national unemployment rate in December and Alabama came very close (see the chart).
The unemployment rate declined in nearly all southeastern states. Alabama's unemployment rate fell to 5.7 percent, and Florida's rate declined to 5.6 percent, the lowest level in nearly seven years for both states. At 6.9 percent, Georgia's unemployment rate continued on a downward path, as did Tennessee's, with an unemployment rate of 6.6 percent. For the second month in a row, Mississippi had the highest unemployment rate in the United States with 7.2 percent, a distinction the state has taken turns owning with Georgia since June 2014.
In Louisiana, the unemployment rate rose again (for the eighth straight month) to 6.7 percent in December. What's going on there? As I've mentioned a few times (here, here, and here), increases in the labor force are the driver of unemployment rate increases in the state, as opposed to people actually losing jobs on net. This isn't a bad thing, especially considering the state added more than 6,000 jobs in December (I'll discuss that shortly). Louisiana just added more people looking for work than the number of people who found work, hence the increase in unemployment. In fact, from January to December 2014, Louisiana's labor force grew by 4.8 percent (while the number of employed grew by just 2.8 percent). An increase like 4.8 percent may not seem like a big number, but when you look at the national figure of 0.4 percent during the same period, Louisiana's labor force growth stands out. National data released last week for the month of January told a similar story: the unemployment rate ticked up 0.1 percentage point to 5.7 percent from 5.6 percent in December, yet much of this increase can be attributed to labor force gains that outpaced gains in employment.
Payrolls also see modest growth
On net, the District added 47,400 jobs in December, and every state experienced positive job growth (see the chart). This contribution makes up 19 percent of the national payroll contribution of 252,000. On aggregate, the industries that contributed the most net jobs in the Sixth District were professional and business services (up 9,800), health care (up 8,300), and accommodation and food services (up 5,200).
Here are some key state-by-state payroll facts from the December report:
- Alabama added 1,000 net payrolls. Much of the state's contributions were reduced by losses in the professional and business services sector (down by 2,400).
- Florida added 12,700 jobs on net, mostly from the professional and business services (up 5,800) and health care (up 4,900) sectors.
- Georgia contributed 14,100 net payrolls. Gains were widespread, yet the sector contributing the most jobs was health care (up 3,100).
- Louisiana added 6,200 net payrolls. Gains were widespread in this state as well, though the biggest contributor was the accommodation and food services sector (up 1,600).
- Employers in Mississippi added 900 net payrolls. Gains in the professional and business services sector (up 1,100) were reduced by losses in other sectors.
- Tennessee employers added 12,500 net payrolls. The largest increases occurred in the goods-producing (up 5,300) and retail trade (up 2,400) sectors. employers added 12,500 net payrolls. The largest increases occurred in the goods-producing (up 5,300) and retail trade (up 2,400) sectors.
Overall, the report was a sign of improving labor market conditions across the Sixth District states, a trend we hope to see continue into 2015.
By Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed
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Florida's Economic Rebound Continues
During the last several months, business contacts in south Florida have been reporting improving economic conditions. They've discussed increased opportunities for capital expenditure projects, optimistic hiring plans, and a general upturn in business activity. This optimism made me wonder if the data on Florida's economic activity reflected what we've been hearing from our contacts in south Florida.
In November, coincident economic indicator, which measures overall economic activity, was 155.99 (see the chart). The index has been steadily improving since 2012. Although it has not yet reached its peak of 160.87 from February 2007, it seems to be within reach. While the November data for metro areas are not yet available, our South Florida business contacts recently indicated that the economy in south Florida continues to improve. Falling oil prices have not had a direct impact on businesses yet, though the general consensus is that oil's price decline is good for the consumer and consumer spending should improve if these lower prices are sustained.
On the manufacturing front, the Southeast Purchasing Managers Index, which is produced by the Econometric Center at Kennesaw State University and measures regional manufacturing activity, declined to 54.1 in November (see the chart). However, with the exception of this past September, it has remained in expansionary territory since August 2012. (A reading above 50 indicates expansion in overall activity; a reading below 50 indicates a decline.)
Regarding employment, payroll employment in Florida hit its trough in March 2007 and has been steadily increasing since then. In November, payroll employment in the state increased by 41,900 to 7.897 million employed, remaining slightly below the prerecession peak of 8.053 million (see the chart). South Florida business contacts, however, specifically report continued challenges in filling positions with specialized skills in technology, mathematics, engineering, management, and lending.
While Florida's unemployment rate has a ways to go before reaching its prerecession low of 3.3 percent, it improved steadily from April 2012 through December 2013 and then plateaued at a little more than 6 percent for the first eight months of 2014 (see the chart). A downward trend in unemployment started in August of last year, reaching 5.8 percent in November. Anecdotally, we heard positive reports from contacts in the employment sector of an uptick in activity from employers using employment agencies to fill open positions.
As you can see from the data above, overall economic activity continues to look promising in Florida, supporting the information we've been receiving from business contacts. Let's hope conditions remain accommodative and that our contacts continue to report good news.
By Marycela Diaz-Unzalu, a senior Regional Economic Information Network analyst at the Atlanta Fed's Miami Branch
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Regional Jobs, Unemployment Rate Show Increases
In the latest edition of Southeastern Insights, my colleagues in the Atlanta Fed's Regional Economic Information Network (REIN) conveyed that most regional business contacts' staffing levels increased over the past couple of months. The recent release of state-level labor market data from the payroll survey produced by the U.S. Bureau of Labor Statistics supports these anecdotal reports.
Nearly all Sixth District states added new payrolls in August. In total, the region added 51,100 net jobs, following 38,200 new payrolls in July (revised up from 27,100). Florida was among the top job contributors in the nation, adding 22,700 new payrolls in August. The only job losses in the Sixth District occurred in Mississippi, which subtracted 4,600 (see the chart).
The bulk of new jobs in the Sixth District came from goods-producing industries such as construction and manufacturing, with 25,200 jobs added on net. Florida alone contributed 10,600 of these jobs, with 6,100 added to the construction sector. Georgia added 7,900 goods-producing jobs, with 5,500 added to the manufacturing sector.
Gains in the professional and business services industry were also fairly widespread, with Sixth District states adding 15,500 payrolls to the sector in August. Only two sectors subtracted payrolls: leisure and hospitality (down 1,300 payrolls) and financial activities (down 200). Though neither sector subtracted payrolls in all states, most of the leisure and hospitality job losses occurred in Florida, which shed 5,800 payrolls, and most financial activities job losses were in Georgia, which lost 1,800 payrolls on net.
However, similar to my post last month about July's regional labor market data, jobs increased on aggregate in Sixth District states in August. However, the unemployment rate increased.
The aggregate unemployment rate for the Sixth District ticked up to 6.9 percent in August from 6.7 percent in July (see the chart). In three of the six District states—Georgia, Louisiana, and Tennessee—the unemployment rate continued its upward trend (now for four straight months). Georgia had the highest unemployment rate among the states in August, at 8.1 percent, a notable 0.4 percentage point increase from 7.7 percent in July. Mississippi's unemployment rate, though still one of the highest in the nation, declined for the first time in four months in August to 7.9 percent, from 8.0 percent in July.
So why did the report reflect an increase in jobs and a rise in the unemployment rate? Though there is some ambiguity about a rising unemployment rate accompanying decent employment growth, one possible explanation is that the number of people looking for work increased more than the number hired. The labor force participation rate (LFPR) is an indicator that supports this notion. In fact, the data show that the LFPR increased in most Sixth District states during the last couple of months. Perhaps recent improving trends in labor market conditions made people more confident in their ability to find employment, thus encouraging them to look for jobs.
The next release of state-level labor market data will be October 21. We'll have to wait and see if this trend continues.
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Jobs Increase (But So Does Unemployment)
The most recent state-level labor market data from the U.S. Bureau of Labor Statistics were mixed, with one report noting an increase in employment and another indicating a rise in unemployment.
Last month the Sixth District states added 27,100 net new payrolls, matching the revised June figure and just slightly below the 2014 monthly average of 28,600 net new payrolls. The only state that subtracted payrolls was Florida, which shed 1,600 payrolls (see the chart).
Most of the District gains came from the construction sector (up 12,100), which corresponds with the results of the Atlanta Fed's most recent poll of southeastern business contacts engaged in commercial construction (we recently discussed that poll's results). Other major regional payroll contributors were leisure and hospitality (up 6,700) and education and health services (up 6,500). Two sectors—government employment and manufacturing—subtracted payrolls from total District figures. Government (down 11,100) was the only sector where payrolls declined in all states, and most of the decline came from local government. Regional manufacturing also declined by 1,600 payrolls, but Florida represented most of the District's manufacturing loss, shedding 2,900 jobs.
On the other hand, last month's unemployment data told a different story in the Sixth District. Although the aggregate unemployment rate ticked up 0.2 percentage points to 6.7 percent in July, three of the six states in the Atlanta Fed's district (out of a total of seven nationally) had fairly notable increases. Georgia's unemployment rate increased to 7.8 percent from 7.4 percent in June, Louisiana's increased to 5.4 percent from 5.0 percent, and Tennessee led the nation with the largest month-over-month increase: one-half of a percentage point, rising to 7.1 percent in July (see the chart). In all three of these states (plus Mississippi), the unemployment rate rose for the third straight month. Mississippi had the highest unemployment rate in the nation in July (at 8.0 percent), and Georgia had the second-highest rate at 7.8 percent. This steadily increasing unemployment across states bears watching as we enter autumn.
We'll see what story (or stories) August data tell us when the next regional employment release comes out on September 19.
By Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed
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A Closer Look at Progress in Selected Southeastern Labor Markets
The U.S. Bureau of Labor Statistics compiles unemployment rates at the county level, which allows a glimpse of how local labor markets are performing. The interactive map of the Southeast below depicts the progress across the region since the second quarter of 2009, which the National Bureau of Economic Research defines as the end of the most recent recession.
Areas in southern Louisiana stand out as having had low unemployment even in 2009, thanks in large part to the strength of the energy sector and continued post-Katrina development. Fast-forward to 2014, and we also see considerable improvement in other areas. But some parts of the Southeast are still struggling with high unemployment.
Although the map shows improvement since the end of the recession, it doesn’t show whether we are back to normal, or even what “normal” looks like. Are local labor markets as strong as they were before the recession? Drilling down a bit more, we separated counties into two categories: those defined as a metropolitan statistical area (MSA) by the U.S. Census Bureau, and those not defined as an MSA. Those counties within an MSA are typically more urban and densely populated, and non-MSA counties tend to be more rural and less populated. In the chart below, we have calculated the unemployment rate for both MSA and non-MSA counties. The size of the bubble represents the size of the labor force, and the solid lines show the national average unemployment rate in each of the two time periods.
In 2007, non-MSA counties in Georgia, Tennessee, and Mississippi had unemployment rates above the 2007 average, whereas all but Mississippi had MSA unemployment rates below the national average. In 2014, unemployment in non-MSA counties in Alabama, Georgia, Tennessee, and Mississippi was above the national average, and all but Georgia had MSA unemployment below the national average. So, above-average unemployment is generally more prevalent in non-MSAs than in MSAs, seemingly a persistent problem. (Florida and Louisiana are the two exceptions in the region, with average or below-average MSA and non-MSA unemployment rates before and after the recession.)
Another way to gauge labor market strength is to measure job growth. Generally speaking, unemployment and job growth move in opposite directions, although declines in labor force participation can also cause the unemployment rate to decline even without strong job growth. In the chart below, to view how MSA and non-MSA counties fared across states, we have plotted year-over-year employment growth in 2007 (prior to the recession) against growth for the year ending with the first quarter of 2014. Once again, the size of the bubble represents the size of the labor force in 2014. We see that across the region, employment growth was weakest among non-MSA counties in both periods, but employment growth was generally stronger among MSA counties in both periods (although only MSA counties in Florida and Louisiana experienced above average employment growth in 2007 and 2014).
The unemployment map demonstrates that labor market conditions have improved in most parts of the Southeast since the end of the recession. However, many smaller rural communities continue to struggle with higher levels of unemployment and weaker employment growth than their big-city neighbors.
By John Robertson, a vice president and senior economist, and
Whitney Mancuso, a senior economic analyst, both of the Atlanta Fed's research department
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Florida, On Holiday
In May, the Sixth District states added just 15,000 net new payrolls. This increase follows three months where the states hit the mark of 40,000 new payrolls per month. However, last month, the District's labor market held two dubious distinctions: first, Florida shed more payrolls than any other state in the nation, and second, Georgia—despite adding 12,900 payrolls in May—had the largest statistically significant increase in its unemployment rate than any other state in the nation (up 0.3 percentage points; see the chart).
As you can see in the chart above, Florida added about 100,000 payrolls for the first four months of 2014 before hitting a snag in May. So what happened last month? Three of the state's sectors that appeared to have turned the corner following the downturn actually were hit hard in May: employment in the construction and accommodation and food services sectors both declined last month, losing 6,100 and 7,700 payrolls, respectively. Hiring in professional and business services—a sector recovering faster than most in the postrecession period—shed 9,500 payrolls. Florida's professional and business services sector added 25,500 payrolls during the first four months of 2014.
As always, a reasonable word of caution when looking at these data: one month does not a trend make. Still, you can't help but scratch your head on this one, especially with accommodation and food services, as the weather warms up after a harsh winter and people begin planning their Florida beach getaways. You can see how employment in the previously mentioned sectors is faring relative to their most recent peaks and troughs in the chart below.
On the other hand, Florida's labor market is still showing some signs of life: the trade and transportation sector added 5,300 payrolls, and retailers added 2,100 payroll jobs.
Other District states fared better in May. As previously mentioned, Georgia added 12,900 payrolls (with 5,400 of those being in professional, scientific, and technical services), and Louisiana added 8,500 payroll jobs over the month. Tennessee added 6,700 payrolls, and Mississippi—where monthly payroll growth has averaged 1,300 during the past 12 months—added 4,100 payrolls.
State unemployment rates
Despite five out of six District states adding payrolls in May, five out of six District states also saw increases in their unemployment rates. The District's aggregate unemployment rate ticked up 0.1 percentage point to reach 6.5 percent, while Mississippi's ticked up to reach 7.7 percent (the highest rate in the District). Georgia saw a 0.3 percentage point increase, reaching 7.2 percent. Louisiana's noticeably lower rate of employment increased to 4.9 percent (see the chart).
To find out how many jobs it would take to lower unemployment rates in all 50 states, check out the Atlanta Fed's Jobs Calculator.
The next national employment release will be out July 3, and the next regional employment release comes out July 18.
By Mark Carter, a senior economic analyst in the Atlanta Fed's research department
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Are We There Yet?
If you’ve been reading the U.S. Bureau of Labor Statistics’ monthly Regional and State Employment and Unemployment press releases lately (and really, who hasn’t?), you may have noticed that Florida has been mentioned as one of the states with the fastest payroll growth. (In April, Florida had the third-largest payroll gain of any state in the nation, adding 34,000 payrolls across the state; this gain trailed only Texas, which added 64,100, and California, which gained 56,100 payrolls.) Indeed, during the last few months, the state’s payroll growth seems to have shifted into the next gear (see the chart).
Florida has added just about 100,000 payrolls from January through April (97,900, to be exact), which seemed like a nice even number for an economic analyst to tear apart. Almost a third of Florida’s new payrolls so far in 2014 have come in the leisure and hospitality sector (see the chart). The professional and business services sector accounts for a little more than another quarter of the year-to-date job gains.
But still, a good bit left to go...
However, although the pace of payroll growth appears to be picking up for the state (and for the entire Sixth District as well; more on that shortly), in terms of the number of jobs there’s still quite a ways to go just to get back to where the state was prior to the recession. Florida’s payrolls peaked in March 2007 at just over 8 million; by December 2009, that figure was down to about 7.1 million. Incorporating April’s 34,000 new payrolls, the state sits at just shy of 7.8 million payrolls (see the chart).
Between Florida’s last peak in payrolls and the level in April 2014, the state’s payroll gap is 274,000. Coincidentally, with eight months left in this year, if Florida’s payroll growth for the rest of 2014 continues at or slightly better than April’s pace, the state could ring in 2015 with a new level of peak employment.
For the Sixth District as a whole, the region is still down 444,000 payrolls from peak employment in March 2007, when the District had about 20.1 million payrolls. If April’s pace of aggregate District payroll growth (an increase of 62,400) held for the remaining eight months of the year, the Sixth District would also have a new level of peak employment by New Year’s Day.
Other highlights of the state employment report
Sixth District states added 62,400 payrolls during April, with 34,000 of those coming from Florida. Georgia had the second-largest gain within the Sixth District by adding 14,600 payrolls. Louisiana and Mississippi each added just under 5,000 payrolls (4,700 and 4,900, respectively), with Mississippi seeing its second month, with more than 4,000 jobs added each month since the U.S. Census surge in employment in 2010. Tennessee added 2,400 new payrolls, and Alabama saw 1,800 new payrolls.
The Sixth District aggregate unemployment rate ticked down to 6.4 percent in April, a result of declines in Florida, Mississippi, and Tennessee. Rates of unemployment stayed the same in Georgia (7.0 percent) and Louisiana (4.5 percent) and ticked up in Alabama (from 6.7 percent to 6.9 percent; see the chart).
The next regional and state employment and unemployment report will be released Friday, June 20.
By Mark Carter, a senior economic analyst in the Atlanta Fed’s research department
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Regional Payroll Growth Rebounds in March
According to last week's regional and state employment report from the U.S. Bureau of Labor Statistics (BLS), Sixth District states added 41,500 payrolls on net in March, and the unemployment rate rose slightly from 6.4 percent to 6.5 percent. This month's release also came with an upward revision to February data that indicated the District added 40,500 jobs that month, about 6,100 payrolls higher than the original February estimate. The table gives a state-by-state breakdown of payroll revisions:
The new March data and revised February data appear to be another step in the right direction and perhaps give a somewhat stronger signal that the region's labor markets are gaining some traction after experiencing a few months of slower job growth earlier in the year, a pattern not uncommon over the last few years. Not surprisingly, we've seen a similar pattern in the national data as well (see the chart).
Once again, Florida was the primary driver of Sixth District payroll growth in March, adding 22,900 payrolls, with Georgia seeing a nice rebound (up 14,600) from February's negative payroll growth (when it was down 5,800). The only state to lose jobs from February to March was Mississippi, which shed 1,400 payrolls. This was the fourth straight month of net payroll losses in that state.
Florida's net payroll gain was the largest one-month addition of any state in the nation, according to the BLS report, and was driven by the leisure and hospitality sector (up 9,500), health care (up 3,300), construction (up 1,900) and manufacturing (up 1,500), and Georgia's net payroll gain—the third-largest of any U.S. state—was driven by retail (up 3,800), the professional and business services sector (up 3,300), and health care (up 3,200).
As for other District states, Tennessee experienced a modest gain in payrolls in March, adding 4,200 jobs. With the largest revision of any Sixth District state, Tennessee's February net payrolls were revised up 3,400 payrolls for a total of 10,300 payrolls. Tennessee's payroll growth over the two-month period of February and March was primarily concentrated in professional and business services (up 6,800 payrolls). Louisiana and Alabama respectively added 900 and 300 jobs in March (see the chart).
The aggregate unemployment rate for the Sixth District rose from 6.4 percent to 6.5 percent in March. Half of the six District states experienced an increase in their unemployment rates (Alabama, Florida, and Mississippi), and Louisiana's rate remained unchanged, Georgia's fell from 7.1 percent to 7.0 percent, and Tennessee's fell from 6.9 percent to 6.7 percent (see the table).
Want to find out how many jobs it would take to lower the unemployment rate in any of the 50 states? Check out the Atlanta Fed's State Jobs Calculator.
The BLS's next regional and state employment report, which will reflect April data, will be released May 16.
By Teri Gafford, a Regional Economic Information Network director in the Atlanta Fed's Birmingham Branch
Mark Carter, a senior economic analyst in the Atlanta Fed's research department
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Beige Book: Warming Economy Accompanies Spring’s Thaw
Eight times a year, each of the 12 Reserve Banks gathers anecdotal information on current economic conditions in its district through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. Their findings are reported in the Summary of Economic Conditions, also known as the Beige Book. The report is published on the Federal Reserve Board of Governors' website about two weeks prior to each Federal Open Market Committee meeting.
The first sentences of the national summary and each Bank's report often receive much attention because the lead sentence tends to summarize economic conditions in that region.
Here is a compilation of the first sentence of the national summary and each Reserve Bank’s report:
- National: Reports from the twelve Federal Reserve Districts suggest economic activity increased in most regions of the country since the previous report. (A previous SouthPoint post also mentioned the weather’s effect on overall economic conditions.)
- Boston: The First District economy continues to expand moderately, according to business contacts, although growth rates vary across sectors and firms.
- New York: Economic activity in the Second District rebounded since the last report, as the harsh winter weather abated.
- Philadelphia: Aggregate business activity in the Third District grew at a moderate pace during this current Beige Book period.
- Cleveland: On balance, economic activity in the Fourth District declined slightly in the past six weeks.
- Richmond: The Fifth District economy expanded moderately since our last report.
- Atlanta: On balance, the Sixth District economy expanded at a modest pace from mid-February through March.
- Chicago: Growth in economic activity in the Seventh District picked up in March, and contacts generally maintained their optimistic outlook for 2014.
- St. Louis: Business activity in the Eighth District has declined slightly since our previous report.
- Minneapolis: The Ninth District economy continued to grow at a moderate pace since the last report.
- Kansas City: The Tenth District economy grew moderately in March, and most contacts were optimistic about future activity.
- Dallas: The Eleventh District economy grew at a moderate pace over the last six weeks.
- San Francisco: Economic activity in the Twelfth District continued to improve moderately during the reporting period of mid-February through early April.
As you can see, almost all districts are experiencing the same level of economic activity.
Here are some notable highlights from the Atlanta Fed's contribution to the Beige Book:
Consumer spending and tourism
- District merchants reported an uptick in activity from mid-February through March following sluggish sales in January, which were widely attributed to the severe winter weather. Light motor vehicle sales grew modestly during the time period.
- Hospitality contacts in areas negatively affected by the adverse winter weather saw improvements in activity.
Real estate and construction
- Brokers reported home sales were mixed. Inventory levels continued to fall on a year-over-year basis, and the majority of contacts reported that home prices remained ahead of the year-earlier level.
- The majority of builders reported that construction activity and new home sales were ahead of the year-earlier level. The majority of contacts continued to report modest home price appreciation.
- District brokers noted that demand for commercial real estate continued to improve. Construction activity continued to increase at a modest pace from last year.
- Manufacturers reported increased activity across the region from mid-February through March. Significant improvements were cited in production and new orders.
Banking and finance
- Bankers noted an increase in loan demand.
- District payroll growth remained constrained from mid-February through March.
Prices and wages
- Nonlabor input costs increased very slowly, with a few noted exceptions, including rising costs for developed land, construction materials, and food. Profit margins remained tight across most industries as contacts continued to report very little pricing power.
- Contacts continued to indicate little wage pressure outside of some high-skilled positions.
The next Beige Book will be published June 4.
By Shalini Patel, an economic policy analysis specialist in the Atlanta Fed's research department
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